The influence of Big Labor over the Lansing City Council
recently threatened to halt both the cleanup and economic development of a
contaminated riverfront property located in the capitol city's downtown. At
issue was the council's last-minute decision to hold up an environmental
cleanup tax abatement for the project unless the developer agreed to pay
union-scale wages and benefits for all of the construction jobs needed to build
his $23.1 million upscale apartment complex.

Interestingly, Lansing Mayor Virg Bernero is standing up for
the entrepreneurs and opposing the union-scale wage requirement. This will come as a surprise for many who know him only from his frequent
cable TV news appearances and recent rhetoric on the gubernatorial campaign
trail as a strident defender of Big Labor.

The policy of requiring union-scale wages and benefits on a
construction site is known as a project labor agreement.

The developer has successfully beaten the city council in
court and hopes to move forward with the project. But the incident raises the prospect that Big
Labor will continue to use the tactic in the near future to hold other private
development projects in Lansing and other Michigan cities hostage to PLAs. A
construction trade industry representative thinks state law should be changed
to stop this from ever happening again.

The developer, Pat Gillespie of East Lansing, purchased the
property for $1.6 million from the city. He did this knowing that he would need
to spend at least $1 million - and perhaps much more - clearing up an as yet
unknown amount of environmental contamination. In the sale agreement with
Gillespie, the city agreed to use reasonable efforts to help him acquire
brownfield tax credits and other assistance to help pay for the clean-up of the
contamination. The property sits on the bank of the Grand River, five blocks
from the state Capitol Building.

To fulfill the city's part of the agreement, the council
took up the issue of extending the brownfield help during two council meetings
in October. But at these meetings there emerged a sentiment by four of the
eight council members who believe that Gillespie should also be required to
agree to a PLA covering 100 percent of the jobs used to build his apartment complex.
It is estimated that at least 84 workers will be hired for the work.

Ultimately, the council deadlocked 4-4 on votes to extend
the brownfield assistance, thus effectively refusing to approve the help. Gillespie sued, and on Oct. 25 Ingham Circuit
Court Judge Rosmarie Aquilina ruled that he had held up his end of the land
purchase contract and awarded the brownfield package to him.

On Nov. 8, following the court order, council met again and
had another acrimonious debate about whether or not they should vote to discuss
an appeal of Aquilina's decision. Mayor Bernero joined this debate and steadfastly
supported Gillespie.

Councilmember Kathie Dunbar is allied with the mayor on this
issue. At the Nov. 8 hearing she also fired several warnings toward the four
council members who wished to continue down the path of blocking Gillespie's
plans.

"We breached a contract," said Dunbar of the council's vote
against Gillespie. "When you do that, you negate your insurance policy that
covers your claims."

Losing a drawn-out legal appeal with no insurance
protection, Dunbar noted, could force the city to pay up from its general fund for
all of the damages and all of the attorney fees associated with its decision to
breach the contract. She warned that it would be the taxpayers of Lansing who
would pay for the council's costly mistake if the politicians decided to
continue their PLA demands on Gillespie in the courts.

In a contentious appearance before the council, Bernero
accused the block of four of playing "roulette" with the city's development
future, and putting "petty politics before progress." He also estimated that
fighting and losing a "dangerously shortsighted" appeal could cost the city as
much as $6 million and compromise the city's ability to fund police and
firefighters.

Councilmember Brian Jeffries, one of the four votes holding
up Gillespie's plan, accused the developer of having an "entitlement mentality"
toward the brownfield abatement help. A
fired-up Bernero jumped to Gillespie's defense and gave a ringing endorsement
of entrepreneurs who wish to come to Lansing and take risks for progress.

"You talk about an entitlement mentality," Bernero said of
Jeffries. "I frankly think that takes a lot of nerve for somebody who is in the
public sector and not the private sector."

The mayor also noted that he is "grateful" for every
entrepreneur like Gillespie who wants to come to his city and "make money," and
that he wished to roll out a red carpet for them.

Gillespie asserts
that he attempted to compromise with the local unions, saying that well before
the initial council vote he would be willing to agree to apply a PLA to at
least 50 percent or more of the riverfront construction work. But Gillespie
notes that this halfway compromise was not sufficient for the unions and their
allies on city council, who wanted 100 percent PLA coverage.

Following Gillespie's victory in court, Jake Jacobson of
United Auto Workers Local 652 told the Lansing State Journal that the
developer's decision to sue the city demonstrated that "His heart is not in the
right place."

"It just goes to show the people of Lansing that Pat
Gillespie is not willing to work with the work force of Lansing."

But Chris Fisher, president and CEO of the Associated
Builders and Contractors of Michigan, asserts that at least some of the four
council members insisting upon the PLA had compromised motives of their own.

"Council members were awarding special interest favors to
their campaign supporters," he said, alluding to the unions.

ABC is a trade group that represents construction
contractors in Michigan.

After its debate concluded, the council took a vote on
whether or not to discuss an appeal of the court order. There was not enough
support in favor of discussing an appeal, thus presumably clearing the last
known legal hurdle that council will put in the way of cleaning the site and
building the apartment complex. Gillespie must now wait for state approval of
the brownfield assistance.

ABC-Michigan opposes PLAs
being required on public-sector construction projects such as public school
buildings because they needlessly drive up the cost to taxpayers.

"Free and open competition is conducive to production,
economic growth and efficient use of limited resources," states the ABC
website, which notes that 80 percent of the construction workforce in Michigan
is non-union and thus discriminated against when PLAs are imposed.

But Gillespie's proposal isn't for building a public
building: It would be a privately-owned apartment complex on private land.
Fisher believes the Lansing City Council's attempt to impose a PLA on the
construction of a private building is the first time such a thing has been done
in Michigan, and he doesn't ever want to see it happen again.

"This is an alarming trend," he said. "Other states have
passed laws to stop this, and we should do it here as well."

~~~~~

Below is a brief MichCapCon.com highlight video of the
Lansing City Council's Nov. 8, 2010 meeting, featuring the comments of the
mayor.